Crypto punters on Polymarket bet Skype billionaire likeliest bail poster for SBF

Punters are betting money on the identity of one of the two anonymous guarantors who helped secure the $250 million bail for disgraced former FTX CEO Sam Bankman-Fried, after a judge ruled that their identities be revealed in public interest. According to the odds, the punters think Jaan Tallinn, co-founder of Skype, is the likeliest of the five people listed, but the low-liquidity market for the bet also suggests overall low conviction.

The bets are being placed on Polymarket, a blockchain-based betting site that allows users to speculate on events with binary outcomes. Other bets currently offered on the site range from “Will Donald Trump be President of the USA on May 31, 2023?”, to “Will a nuclear weapon detonate by June 30?” and “Will @elonmusk have more than 22,726 tweets on February 10?”

The bet in question offers users the option to bet on any one of five individuals who are suspected of co-signing Bankman-Fried’s $250 million bail as guarantors, alongside his parents.

Among the five options for the bet are Estonian billionaire Jaan Tallinn, co-founder of Skype, and an influential backer of the Effective Altruism movement. Tallinn loaned Bankman-Fried’s trading firm Alameda Research $110 million worth of Ether, according to Semafor, a news website.

The other options include Binance CEO Changpeng “CZ” Zhao, TRON founder Justin Sun, Shark Tank star Kevin O’Leary, and Facebook co-founder Dustin Moskovitz.

Based on current prices, the market is offering a 1% return when betting against O’Leary, and 3% against Tallinn. Traders do not offer bids against the other three, suggesting that they are skeptical that the person who bailed out Bankman-Fried is listed in this market.

There is also a catch: a good chance that the identities of the signatories won’t be revealed at all, given that Bankman-Fried’s lawyers still have time until February 7 to appeal the judge’s decision. This might stall or prevent the disclosure of those identities altogether.

But Polymarket, which runs a Discord channel on which users can suggest bets, is extremely quick to capitalise and create markets on all kinds of questions, even if the windows towards their resolution are slim on time or offer no hope of a final resolution, notably bets that hinge on the outcome of court decisions such as whether former Alameda Research co-CEO Sam Trabucco will be federally charged by the end of March.

That, industry watchers say, is because of the site’s unregulated nature: it does not fall neatly under the purview of a single regulatory agency.

“That might give them a bit more license to do whatever they want, such as create a bet on the outcome of a court case,” Matthew Shaddick, formerly head of political markets at UK-based betting exchange Smarkets, told DL News.

“Most regulated betting sites wouldn’t touch those sorts of things, or anything to do with the legal process.”

The CFTC fined Polymarket $1.4 million early last year on the charge that it allegedly allowed people to make bets without being registered. Polymarket has since blocked U.S. citizens from accessing the site, although users say the geo-blocking can be easily bypassed through a virtual private network (VPN).

Caleb Davies, a poker player and prediction markets better who goes by the online alias Gaeten Dugas, is based in the U.S. and actively uses the website.

While he admits Polymarket benefits from a greater flexibility in market creation, its blockchain-based nature can bring pros and cons. One advantage, says Davies, is transparency.

“All of your positions are public, and so are everyone else’s, so it’s easy to see who is on each side of a market.”

Davies said that the visibility also means front-running of trades is common, because crypto trade processing takes place based on the amount of gas (fees) paid for the transaction.

“All of your positions are public, and so are everyone else’s, so it’s easy to see who is on each side of a market.”

“Somebody can monitor your account and make the same trade that you want to by paying more to do so, and their trade will be processed, and yours won’t.”

An interest in news and politics drew Davies into betting on events, he said. Despite its downsides, it’s unlikely he’ll stop using Polymarket.

“The additional income has been great.”